With a liberal government back in power, we can all now breathe slightly easier. But the ruthless commitment to austerity of the previous National government is still felt among our most vulnerable communities.
Just before they left power, the National government, for the first time, increased accommodation supplement rates. These changes have just come into effect as of the 1st of April. While any increase is better than none, this is no saving grace. The increase in accommodation supplement levels still has not kept up with the increase in rents.
Accommodation supplement was last varied in 2007, when it was increased to levels proportionate to 2005 rents by the previous Labour government. Between 2005 and 2017, overall house rental prices rose from $268/week to $437/week, an increase of 63%. This increase is only partially accounted for by the accommodation supplement increase, with the largest increases being given to families with children living in the regions. These families are to receive a maximum of $120/week, up from $75/week in 2007; an increase of 60%.
Those receiving the lowest increases are single people living in major cities with maximum increases of $5 or $20 for those living out of and in Auckland respectively. This accounts for a pitiful 5% increase for some.
In total, these increases average out to about 37%, nowhere near the nationwide increase in rents of 63%. A lot of people who rely on these supplementary benefits will not feel much better off as a result of the increase, and will still be hurting a lot more in comparison to 10 years ago. This is to say nothing of those of us languishing as tenants in Auckland, where rents have increased significantly more over the past decade.
The news is not all bad, however. A lot of suburbs have moved from Area 2 designation to Area 1; this increases the maximum accommodation supplement significantly. Prior to these changes, south Auckland, west Auckland, several towns in north Waikato, Tauranga and Queenstown were in Area 2. This will have a dramatic impact for some families, a solo mum with one child living in South Auckland will see her maximum accommodation supplement increase from $125/week to $235/week. This is a change which has been badly needed for a long time.
The danger, of course, is that these increases will be swallowed by landlords and property managers as has happened to students in Wellington. One of the great contradictions of accommodation supplement is as it gives beneficiaries the capacity to afford greater rents it also gives landlords the capacity to charge beneficiaries more. With such great demand for homes, and such short supply, we’re in a seller’s market; rents are only limited by what tenants can afford to pay.
While it’s great to finally see an increase in accommodation supplement, they don’t go far enough to fixing the issues in our system. What we really need is a comprehensive solution, with rental controls for runaway rents, a proper capital gains tax to remove the incentive to invest in property, regulations around quality of rental housing, a radical re-build of state housing and on top of all of this, a further increase in accommodation supplement to cover the actual increase in rental costs over the past decade.